Saving for Retirement as a Solopreneur: Strategies to Know
Tips for Thinking Long-Term as You Build Your Business in the Present
As a solopreneur, you have your hands full with every aspect of your business, and this multitude of responsibilities likely keeps you busy. However, it’s important to have an eye toward the future, too, and to think intentionally about your solopreneur retirement planning. While it may be tempting to focus solely on building your business in the here and now, it’s important to prioritize your long-term financial goals, including saving for retirement. Below, we’ll share tips you may find helpful as you develop your savings plan.
Solopreneur Retirement Planning: Determine Your Retirement Goals
Each person’s retirement goals are different, so it’s helpful to start by thinking about what you want out of your retirement years. Think about the age you’d like to be when you retire, where you might like to live and the lifestyle you envision for yourself. Clarifying what this phase of life will look like for you can help you begin to develop a target number for how much you’d like to save. This retirement calculator may be helpful, as well.
Solopreneur Retirement Planning: Choose the Best Retirement Plan for You
Once you’ve gotten closer to identifying that overarching number of how much you need to save for retirement, you’ll have to consider the various methods. There are several possible options for solopreneur retirement planning, including a Simplified Employee Pension (SEP) plan, a Solo 401(k) plan, and a SIMPLE IRA plan. Each plan has its own advantages and disadvantages, so it’s important to do your research and choose the one that best fits your particular needs.
Solopreneur Retirement Planning: Set Up Automatic Contributions
Regardless of the type of retirement account you’re utilizing, a helpful way to stay on track with your savings plan is to set up automatic contributions. This will help you make consistent contributions and avoid the temptation to spend your money elsewhere.
Solopreneur Retirement Planning: Maximize Your Contributions
Speaking of contributions, as a solopreneur, you have the advantage of being able to contribute more to your retirement plan than you would as an employee of a company. For example, with a Solo 401(k) plan, you can contribute up to $66,000 for 2023, which is significantly more than the $22,500 limit for employees with a traditional 401(k) plan.
Solopreneur Retirement Planning: Take Advantage of Available Tax Benefits
Contributing to a retirement plan as a solopreneur can also come with significant tax benefits that you won’t want to overlook. Depending on the plan you choose, you may be able to deduct contributions on your tax return, which can reduce your taxable income and lower your tax bill. You may consider working with a tax advisor to learn more about the opportunities available to you.
Solopreneur Retirement Planning: Consider Working with a Financial Advisor
Saving for retirement can be complicated, especially as a solopreneur, potentially with multiple income streams. Not only might it be helpful to work with a financial professional on your tax strategy, but you may consider working with a financial advisor on a comprehensive retirement plan. An advisor who is experienced in solopreneur retirement planning can help you develop a long-term strategy that aligns with your goals and provides ongoing guidance and support.
At Paces Ferry, we work with many small business owners and solopreneurs. We can help you select the right type of retirement plan, create a strategy and timeline for contributions, help you consider available tax benefits and more. If you’d like to learn more about our services and you’re looking for an Atlanta financial advisor, schedule a call with us today.